Investing through ETFs, OFE or PPK? The results will surprise future retirees

OFEs started their operations in 1999, and PPKs – at the end of 2019. OFEs currently manage PLN 318 billion (UKNF data from the end of April this year), and PPKs – PLN 50 billion (PFR data from the end of April this year). They are trying to multiply Poles' money on the stock exchange, money that is to become pensions in the future. How effectively do they do it?

We compared from 2020, i.e. the first full year of PPK operation. The average rate of return of all funds, including OFE and PPK, since January 2020 was 95.7%. The highest rate of return during this time was achieved by PKO Bankowy OFE with a rate of return of 164.3 percent, and the lowest by PPK UFK Compensa 2030 – 44 percent.

A caveat must be made here: OFEs must invest all the funds received from future retirees in shares, and PPKs with closer dates, e.g. the above-mentioned UFK Compensa 2030, can only invest about 30% in shares, and the rest is kept in bonds. Therefore, the good economic situation on the stock exchange over the last six years has naturally increased the rates of return of OFEs, which are obliged to invest almost all of their net assets in shares and those PPKs that have the highest dates next to their name and invest from 60 to 80 percent. net assets in the stock market.

We decided to compare their results with what can be achieved individually by investing funds in ETFs. The market value of ETFs already listed on the WSE is PLN 96 billion.

We selected four options from the stock exchange offer and checked the potential rates of return to compare them with OFE and PPK:

• investment in WIG20 TR, i.e. shares from the index with dividends,
• half investment in WIG20 TR and mWIG40 TR, i.e. in shares from both indices with dividends,
• investment in the basic NYSE index from Wall Street, i.e. S&P 500
• half investment in S&P500 and WIG20 TR.

Investing in WIG20TR is possible thanks to the Beta ETF WIG20TR fund listed on the WSE, which charges 0.58%. commission on assets per year.

Investment after the middle of the century WIG20 TR and mWIG40 TR can be done through PZU ETF WIG20 TR + mWIG40 TR Portfelowy FIZ, which downloads 0.5 percent commission per year.

To put money indirectly in S&P500 allows Amundi Core S&P 500 Swap UCITS ETF EUR Dist which charges 0.05 percent commission. That's why there is so little, because it is not a TR (total return) index, the index does not include dividends, so the dividend is additional income of the fund, not the certificate owners.

Taking into account the commissions charged annually, we obtain the following set of returns for the years 2020-2026 for our hypothetical ETFs:

• WIG20 TR – 107.1 percent
• WIG20 TR+mWIG40 TR – 141.7 percent
• S&P 500 – 130.6 percent
• S&P500+WIG20 TR – 126.4 percent

We will compare the best and worst of them with the rates of return of OFE and PPK.

ETFs versus OFEs

In the case of OFEs, the average rate of return from 2020 to May 22 is 150.2 percent, of which the lowest was Uniqa OFE (141.4 percent), and the highest was the above-mentioned PKO Bankowy (164.3 percent). As you can see, OFE specialists are useful for something and all the funds managed by them gave higher rates of return than investing in ETFs on your own would provide.

Let's take a look at how the results compare by year:

• In 2020, four out of eight OFEs (Allianz OFE -4.2%, Generali OFE -4.1%, PKO Bankowy OFE -3.5% and PZU OFE -2.7%) had a greater loss than an ETF investing in WIG20TR+mWIG40TR (-2.3%).
• In 2021, no OFE was worse than an ETF (+26.3%),
• In 2022, no OFE generated such a loss as the ETF (-18.9%),
• A year later in 2023, the ETF was the best (+38.61% compared to the average for OFE 36.4%),
• In 2024, the ETF was worse than all OFEs (3.8% compared to 5% average for OFEs),
• In 2025, this ETF was better than all OFEs (it earned 44.6% compared to the average for OFEs of 42.1%),
• In 2026, only one OFE (PKO Bankowy 16.3%) outperforms the ETF (16.2%).

ETFs versus PPK

When comparing PPK with our hypothetical ETFs, the situation is a bit more complicated. As we mentioned above, PPKs have investment strategies imposed by law, depending on the years before the client reaches the age of 60, changed every five years. For funds dated 2065, most of the portfolio will be filled with shares (up to 80 percent) and only part with bonds, and for those with the 2030 date the opposite (usually about 70 percent in bonds).

As a result, unlike OFE, PPKs do not invest all their money in shares, so the result of their investment is not entirely comparable to our hypothetical ETFs. But let's assume that this is a form of capital investment in retirement, one of the choices facing the future retiree, whether he will give the capital to PPK or buy ETFs.

Thus, out of 128 PPK funds, only four have given a higher rate of return since 2020 than the best of our ETFs (WIG20TR+mWIG40TR), i.e. 141.7%. All four are Uniqa funds, which is… the worst company in managing OFE money since 2020. In PPK, this company is the best.

Compared to our S&P500 ETF, the second best choice, whose rate of return we estimated at 130.6%. from 2020 to May 22, 2026, here, apart from Uniqa, we have three PFR funds (2050, 2055 and 2060) and three PPK managed by the Pekao team (2045, 2050, 2055), i.e. a total of 10 out of 128 PPK surveyed.

As in the case of OFE, let's take a look at what it looked like year by year compared to the best ETF.

In 2020, as many as 112 out of 128 PPKs beat our ETF, and none the following year. In 2022, all PPKs were better, and a year later none again. In 2024, the situation repeats itself and our ETF wins over all PPKs, a year later and in 2026 as well.

When the stock market is growing rapidly, a strategy of investing through ETFs in the 60 largest companies on the Warsaw Stock Exchange will always prove to be better than one in which part of the space is allocated to bonds.

Note: The information contained in the text is for informational purposes only and does not constitute an investment recommendation, information recommending or suggesting an investment strategy within the meaning of applicable regulations, or any other form of advice regarding the purchase or sale of financial products.